Offermans v Bradnams Windows & Doors Pty Ltd
[2010] QDC 534
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- Offermans v Bradnams Windows & Doors Pty Ltd[2010] QDC 534
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Offermans v Bradnams Windows & Doors Pty Ltd[2010] QDC 534
Offermans v Bradnams Windows & Doors Pty Ltd[2010] QDC 534
DISTRICT COURT OF QUEENSLAND
CITATION: | Offermans v Bradnams Windows & Doors Pty Ltd [2010] QDC 534 |
PARTIES: | Dennis John OFFERMANS (Plaintiff) -v- BRADNAMS WINDOWS & DOORS PTY LTD (ACN 010 409 819) (Defendant) |
FILE NO/S: | D1 of 2010 |
DIVISION: | Civil |
PROCEEDING: | Application |
ORIGINATING COURT: | District Court at Townsville |
DELIVERED ON: | 30 August 2010 |
DELIVERED AT: | Townsville |
HEARING DATE: | 18 March 2010 |
JUDGE: | Durward SC DCJ |
ORDERS: | Plaintiffs application: Defendants applications: Costs:
|
CATCHWORDS: | CORPORATIONS ACT – allegation of insolvent trading – nature of ‘transaction’ for purpose of s 558FA – uncommercial transactions and running accounts for purpose of s 558FB – secured creditors s 558FC – good faith pleading. PLEADINGS – STRIKING OUT DEFENCE – whether defence pleaded clearly untenable – whether impugned paragraphs should be struck out. FURTHER AND BETTER PARTICULARS – request for particulars re unfair preference, uncommercial transactions, insolvency – whether request is for irrelevant matters and/or evidence rather than particulars. CHANGE OF VENUE – objection to jurisdiction r. 44 – whether proceeding commenced in correct district – balance of convenience r. 45 – whether application premature. |
LEGISLATION: | Corporations Act 2001 ss. 9, 262, 266, 588FA, 588FB, 588FC; Uniform Civil Procedure Rules rr. 44, 45, 157, 161, 171. |
AND CASES: | General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125; VR Dye & Co v Peninsula Hotels Pty Ltd (in liq)[1999] VSCQ 60; Mann & Anor v Sangria Pty Ltd [2001] NSW SC 172; Air Servcies Australia v Ferrier (1996) 185 CLR 483; Capital Finance Australia Ltd v Tolcher [2007] FCAFC 185; Richardson v Commercial Banking Company of Sydney Ltd (1952) 85 CLR 110; Sim v ABC Tissue Products Pty Ltd [2008] NSWSC 192; Pioneer Construction Materials Pty Ltd v Schock & Ors [2007] QDC 143; Cussens & Ors v Sultan & Ors [2009] NSWSC 1114; Robinson v Laws & Anor [2001] QCA 122; Mawson KLM Holdings Pty Ltd (in liq) & Anor v Starmaker (Number 51) Pty Ltd [2005] SASC 309; Rodgers v Berchtold Pacific Pty Ltd [2006] NSWSC 462; Associated Alloys v ACN 001 452 106 Pty Ltd (2000) 202 CLR 588; NRNQ (a limited partnership) v MEQ Nickel Pty Ltd (1991) 2 Qd R 592. |
COUNSEL: | A J Moon for the Plaintiff A Hockings for the Defendant |
SOLICITORS: | Connolly Suthers Lawyers for the Plaintiff Dibbs Barker for the Defendant |
- [1]The plaintiff is the liquidator of Eckerbuilt Pty Ltd ("the company"), a building and construction contractor, appointed pursuant to the Corporations Act 2001 ("the Act").
- [2]The defendant is the manufacturer and supplier of, inter alia, windows and doors which it supplied to the company as part of its business.
The Applications
- [3]On 18 March 2010, I heard three applications, one by the plaintiff to strike out the defence of the defendant; and two by the defendant, one seeking further and better particulars of the statement of claim and the other seeking a transfer of venue for the trial.
The Relevant Provisions of the Act
- [4]Part 5.7(B) of the Act provides for the recovery of property or compensation for the benefit of creditors of an insolvent company.
"DIVISION 2 - VOIDABLE TRANSACTIONS
588FA Unfair preferences
(1) [Where transaction unfair preference] A transaction is an unfair preference given by a company to a creditor of the company if, and if only:
(a) the company and the creditor are parties to the transaction (even if someone else is also a party); and
(b) the transaction results in the creditor receiving from the company, in respect of an unsecured debt that the company owes to the creditor, more than the creditor would receive from the company in respect of the debt if the transaction was set aside and the creditor would prove for the debt in a winding up of the company;
even if the transaction is entered into, is given effect to, or is required to be given effect to, because of an order of an Australian court or a direction by an agency.
(2) [Where debt unsecured] For the purposes of subsection (1), a secured debt is taken to be unsecured to the extent of so much of it (if any) as is not reflected in the value of the security.
(3) [Certain commercial transactions exempted] Where:
(a) a transaction is, for commercial purposes, an integral part of a continuing business relationship (for example, a running account) between a company and a creditor of the company (including such a relationship to which other persons are parties); and
(b) in the course of the relationship, the level of the company's nett indebtedness to the creditor is increased and reduced from time to time as the result of a series of transactions forming part of the relationship;
then:
(c) subsection (1) applies in relation to all the transactions forming part of the relationship as if they together constituted a single transaction; and
(d) the transaction referred to in paragraph (a) may only be taken to be an unfair preference given to other company to the creditor if, because of subsection (1) as applying because of paragraph (c) of this subsection, the single transaction referred to in the last-mentioned paragraph is taken to be such an unfair preference.
588FB Uncommercial transactions
(1) [Where transaction uncommercial] A transaction of a company is an uncommercial transaction of the company if, and only if, it may be expected that a reasonable person in the company's circumstances would not have entered into the transaction, having regard to:
(a) the benefits (if any) to the company of entering into the transaction; and
(b) the detriment to the company of entering into the transaction; and
(c) the respective benefits to other parties to the transaction of entering into it; and
(d) any other relevant matter.
(2) [Matters irrelevant] A transaction may be an uncommercial transaction of a company because of subsection (1):
(a) whether or not a creditor of the company is a party to the transaction; and
(b) even if the transaction is given effect to, or is required to be given effect to, because of an order of an Australian court or a direction by an agency.
588FC Insolvent transactions
A transaction of a company is an insolvent transaction of the company if, and only if, it is an unfair preference given by the company, or an uncommercial transaction of the company, and:
(a) any of the following happens over time when the company is insolvent:
(i) the transaction is entered into; or
(ii) an act is done, or an admission is made, for the purpose of giving effect to the transaction; or
(b) the company becomes insolvent because of, or because of matters including:
(i) entering into the transaction; or
(ii) a person doing an act, or making an admission, for the purpose of giving effect to a transaction."
Plaintiff's Claim
- [5]The plaintiff 's claim alleges that on or about 30 July 2008 to on or about 28 October 2008 and in respect of moneys then due and owing by the company to the defendant, the company made payments totalling $80,870.82 to the defendant. The plaintiff alleges that each payment was a "transaction" within the meaning of s 9 of the Act and within the meaning of Division 2 of Part 5.7B of the Act; and that at the time of the payments the defendant was an unsecured creditor of the company in an amount greater than such transaction. In other words, the allegation is that the company was trading whilst insolvent.
- [6]The point of the allegation is, simply stated, that the defendant received payments greater than it would have received if it had been necessary to prove the debts in a winding up of the company.
- [7]Hence the plaintiff alleges that each payment was an "unfair preference" given by the company to the defendant within the meaning of s 588FA of the Act or alternatively, was an "uncommercial transaction" within the meaning of s 588FB of the Act; and consequently was an "insolvent transaction" within the meaning of s 588FC of the Act.
- [8]The relevant "relation-back period" commenced six months prior to 07 January 2009 (the date upon which the winding up of the company commenced), that is 07 July 2008.
- [9]The plaintiff alleged in its claim that the company was unable to pay its debt as and when they fell due continuously from the period at least from 07 July 2008 until 07 January 2009.
- [10]The plaintiff's claim particularises the following:
A. • Assets as at 30 June 2008
$1,435,371
Assets as 07 January 2009
$1,492,196
• Liabilities as at 30 June 2008
$2,175,048
Liabilities as at 7 January 2009
$1,813,872
Hence there is alleged to have been a surplus of liabilities over assets of $739,677 at 30 June 2008 and $321,676 at 30 January 2009. That is: an operating loss in the whole of the relation-back period.
B. • Outstanding trade creditors valued at $1,247,357 (cash-at-bank and cash-at-hand) at 30 June 2008
• Outstanding trade creditors valued at $921,143 (cash-at-bank and cash-at-hand) at 07 January 2009
That is, no surplus of combined cash-at-bank and cash-at-hand over trade creditors.
C. • Bank overdraft of $905,933 at 30 June 2008
• Bank overdraft of $688,345 at 07 January 2009
D. • Significant (account) assets at 30 June 2008 of:
- Trade debtors at $371,393
- Loans to directors at $961,176
• Significant (account) assets at 07 January 2009 of:
- Trade debtors at $504,871
- Loans to directors at $932,054
Both significant (account) assets at each date constituting an overstated recoverability.
The Defence
- [11]The defence of the defendant alleged (in paragraphs 2(c), (d) and (e), 3, 4, 10(b), (d) and (e)) that each of the payments referred to as "defendant transactions" were made pursuant to a credit agreement dated 30 March 2007, were for goods supplied by the defendant to the company pursuant to the credit agreement and form part of a "supply transaction" (entered into in good faith by the defendant) consisting of six steps, namely:
• The ordering of goods by the company;
• The supply of goods by the defendant;
• Delivery of goods to the company by the defendant;
• Invoicing for the goods by the defendant to the company;
• Payment for the goods by the company to the defendant; and
• Contemporaneously with payment, the transfer and ownership of the goods to the company from the defendant.
- [12]The defendant alleged that none of the payments or supplies of goods were "transactions" for the purposes of Division 2 Part 5.7B of the Act.
- [13]The defendant alleged that the supply transactions were essential to the defendant's normal commercial activities to earn an income and that the defendant obtained a direct benefit from the supply transactions.
- [14]In so far as the relation-back period is concerned, the defendant alleged that it commenced on 07 July 2009 and ended on 07 January 2009. It submitted that the supply transactions did not fall within the relationship-back period and were not voidable.
- [15]Finally, the defendant alleged that it was at all material times secured by an equitable charge against the real and personal property of the company (clause F of the credit agreement); the company's obligations to the defendant under the credit agreement was secured by guarantee an indemnity by directors of the company in favour of the defendant; the directors secured the release of caveats lodged over properties owned by them by payments made on 28 October 2008 on two supply transactions (made on 04 July 2008) and certain fees.
- [16]The defendant alleged that it was a secured creditor of the company (and hence that the series of payments were not "unfair preferences"), pursuant to clause E of the credit agreement. Clause E provided as follows (with the parties identified by me in lieu of the actual generic words):
"The company hereby charges in the defendants' favour all its estate and interest in any real and personal property that it owns at present and in the future with due payment to the defendant of all monies that may become payable to the defendant by virtue of this application or otherwise arising from the defendant providing credit to the company prior to or after the date hereof and hereby appoints as the company's duly constituted attorney the company's secretary from time to time to execute in the company's name, and as the company's act and deed, any real property mortgage, bill of sale or consent to any caveat the defendant may choose to lodge against real property that the company may own in any Land Titles Office in any State or Territory of Australia even though the company may not have default in carrying out the company's obligations hereunder."
- [17]There is a defence pleaded in the alternative under s 588FG(2) of the Act, which in essence alleges that for a substantial period of the commercial relationship between the company and the defendant, goods were supplied in good faith by the defendant, payments were received from the company on customary trading terms and that at no time did the defendant have knowledge of the company's financial position other than from its customary trading experience and did not either suspect or have grounds to suspect that the company was either insolvent (if it was) or would become insolvent in terms of s 588FC(b) of the Act.
The Hearing
- [18]The applications were heard discretely but in the same hearing: the first was the plaintiff's application to strike out parts of the defence pursuant to Rule 171 Uniform Civil Procedure Rules ("UCPR"); the second was the defendant's application for further and better particulars of the statement of claim or alternatively that parts of the statement of claim be struck out (Rules 161 and 171 UCPR respectively); and the third to transfer the proceedings to the District Court at Brisbane (Rules 44(4)(b) and 45 UCPR).
Plaintiff's Application to Strike-Out Defence
- [19]Rule 171(1) UCPR sets out the circumstances where r. 171 will apply, namely where the pleading or part of the pleading:
(a) discloses no reasonable cause of action or defence; or
(b) has a tendency to prejudice or delay the fair trial of the proceeding; or
(c) is unnecessary or scandalous; or
(d) is frivolous or vexatious; or
(e) is otherwise an abuse of the process of the Court.
- [20]The plaintiff contends that the assertions made in the defence that the payment of moneys by the company to the defendant are not "transactions"; that only the delivery of goods by the defendant to the company can properly be regarded as "transactions"; and that the defendant is a secured creditor of the company within the meaning of s 588FA of the Act, cannot and will not succeed at trial, regardless of the evidence led by the defendant. It submits that in those circumstances the Court should be properly satisfied, on the requisite standard, that those aspects of the defence as the plaintiff has identified are liable to be struck out on one or more of the grounds referred to in r. 171.
- [21]The general approach to striking out a pleading in the exercise of a discretion is that the claim or defence made is clearly untenable: General Steel Industries Inc v Commissioner for Railways (1964) 112 CLR 125 at 129. The exercise of discretion does not take into account any merit of the claim or defence nor questions of law unless they are clear. If they are not clear, questions of law are matters for trial and not for determination on an application to strike out a pleading. However, if a pleading is struck out, the party adversely affected thereby is entitled to leave to re-plead.
The Application to strike out certain parts of the Defence: specific issues.
- [22]There are three issues raised in the application to strike out part of the defendant's pleading.
"What are 'transactions' in the context of this case?
“Part 1.2 Interpretation Division 1 - General
s 9
transaction, in Part 5.7B, in relation to a body corporate or part 5.7 body, means a transaction to which the body is a party, for example (but without limitation):
(a) a conveyance, transfer or other disposition by the body of property of the body; and
(b) a charge created by the body on property of the body; and
(c) a guarantee given by the body; and
(d) a payment made by the body; and
(e) an obligation incurred by the body; and
(f) a release or waiver by the body; and
(g) a loan to the body;
and includes such a transaction that has been completed or given effect to, or that has terminated."
- [23]The defendant admits in paragraph 2 of the Defence the payments made - and payment dates - by the company to the defendant (as set out in paragraph 4 of the Statement of Claim), but says that the "defendant transactions" occurred pursuant to the credit agreement and that the payments were part of a "supply transaction".
- [24]The plaintiff submits that the payments are "transactions" simpliciter for the purposes of the Act.
- [25]The defendant submitted that the relevant transaction date is the date of delivery of the goods to the company by the defendant or the date of the invoice for the goods, not the date of payment: in other words, a "supply transaction" that comprises the six steps.
- [26]If the plaintiff is correct, the "transactions" are within the relation-back period. Conversely, if the defendant is correct, the "transactions" fell outside the relation-back period.
- [27]In VR Dye & Co v Peninsula Hotels Pty Ltd [1999] VSCA 60 (20 May 1999) the Court wrote the following about "transactions", at [54]:
"The transaction in question on each case is not the agreement for the supply of the goods and services (with or without an arrangement for payment) but is the transaction whereby the company in fact pays for the goods and services;" and
"The 'transaction' to be examined is the payment or other disposition … although the agreement for the provision of goods and services or the like may be looked at in order to determine the purpose of the transaction remunerating the supplier. If that restriction be kept in mind, then there should be no reason why an appropriate transaction should not be worked out in a number of steps, so long as it is a genuine means of effectuating payment or the like. In each case it will be the entirety of the transaction and its 'ultimate effect' which must be considered."
- [28]The New South Wales Supreme Court in Mann & Anor v Sangria Pty Ltd [2001] NSWSC 172 approved that reasoning: the language of s. 588FA now excludes transactions that the earlier legislation permitted as non-voidable transactions, such as payments made in the course of a running account.
- [29]The essential feature of a running account is that it predicates a continuing relationship of debtor and creditor with an expectation that further debits and credits will be recorded: Air Services Australia v Ferrier (1996) 185 CLR 483. The quantum of the preference in a running account is the difference between the highest amount owing during the relation-back period compared to the amount owing on the last day of the period. Section 588FA(3) is a codification of the law relating to which a series of transactions are treated in the same way that a running account used to be treated for the purposes of the law of preferences. (See the commentary on the Corporations Act 2001, in the 2010 publication by Thompson Reuters at p 720-721).
- [30]In Air Services Australia v Ferrier the High Court (at 502) wrote:
"… a payment made during a six month period cannot be viewed in isolation from the general course of dealing between the creditor and the debtor before, during and after that period. Resort must be had to the business purpose and context of the payment to determine whether it gives the creditor a preference over other creditors. To have the effect of giving the creditor a preference, priority or advantage over other creditors, the payment must ultimately result in a decrease in the nett value of the assets that are available to meet the competing demands of other creditors."
- [31]There are a number of authorities that give the word "transaction" a wide meaning: Capital Finance Australia Ltd v Tolcher [2007] FCAFC 185; Richardson v Commercial Banking Company of Sydney Ltd (1952) 85 CLR 110.
- [32]In Capital Finance Australia Ltd v Tolcher, Gordon J (at para 120) observed that:
"… the term 'transaction' is a word of wide connotation. It may include a series of events in a course of dealings initiated by a debtor intended to distinguish a debt;"
and that
"The complexity of modern business relations necessarily requires their court to look objectively at the totality of the relationship between the parties in identifying and characterising the 'transaction' for the purposes of the relevant provisions of Part 5.7B of the Corporations Act ."
- [33]The defendant submitted that the "six steps" in the "supply transaction" were connected (and should not be "severed", so to speak) and formed, as a whole, the transaction for the purposes of s 9 of the Act.
- [34]In my view the defendant is construing the meaning of "transaction" in a way that avoids the consequences flowing from the relation-back period and that is contrary to law. Whilst the cases emphasis the characterisation of the "transaction" is to be viewed in the context of the general course of dealing between the parties and not in isolation, that is not a reference to the construction of a "transaction" to encompass every element of a single sale and purchase of goods or services, but rather a reference to the business relationship in an holistic or contextual sense covering the history of "transactions" between the parties.
- [35]The gravaman of s. 588FA is the "payment" for the goods and services. If there was no payment, there would be no issue about a preference, priority or advantage accruing to a supplier of goods or services within a relation-back period.
- [36]In Sims v ABC Tissue Products Pty Ltd [2008] NSWSC 192, Hammerschlag J at [13] explained the running account "defence" as follows:
"On a running account there will only be an unfair preference if during the relevant period … the creditor was paid more than the value of the goods it supplied during that period, that is only if there has been a nett reduction in the amount of the debt during the period under consideration."
- [37]The "transaction" described in s 9 is the act of payment by the company for goods and services. The payments pleaded by the plaintiff are the "transactions" for the purposes of s 588FA. They are admitted having been made by the company to the defendant on the dates pleaded. Those dates are within the relation-back period.
- [38]Mr Hockings also relied on Rodgers v Berchtold Pacific Pty Ltd [2006] NSWSC 462; and Associated Alloys v ACN 001 452 106 Pty Ltd (2000) 202 CLR 588. However, as far as is relevant they deal with s 558FE of the Act. However, I do not see that they are relevant to the issues in this application.
- [39]I am satisfied that the defence in respect of those matters is clearly untenable and that the impugned allegations in the defence are wrong in law.
- [40]The plaintiff is entitled to succeed in in its application and paragraphs 2(c), (d) and (e), 3, 4, 10(b), (d) and (e) are struck out. The defendant should have leave to re-plead.
Is the Defendant a Secured Creditor of the Company?
- [41]There is no definition of "secured creditor" in the Act. Does clause E of the credit agreement create an "equitable charge" that removes it from the application of s 588FA of the Act?
- [42]Chapter 2K of the Act refers to "charges". Part 2K.2 deals with registration of charges. Section 262 requires charges whether legal or equitable on property of a company to be registered. The Australian Securities and Investment Commission maintain a register of company charges. Section 266 of the Act provides that certain charges are void against a liquidator or administrator unless a notice in respect of the charge was lodged under s 263 or 264 within the relevant period or at least six months before the critical day or otherwise as provided in the section.
- [43]There is evidence that clause E ("the charge") is not registered. The defendant submitted that even if the charge was not registered and thereby was unenforceable against a liquidator by a virtue of s 266, it nevertheless retained its character in respect of the earlier transactions and that the debts were at that time not "unsecured".
- [44]I do not agree. The continuing characterisation of the debt as a "secured debt" so as to be enforceable against the liquidator, was at least dependent on registration of the charge. In the absence of such registration the characterisation of the "charge" is altered by statute in s 266 and is therefore void against the plaintiff as liquidator of the company: see Pioneer Construction Materials Pty Ltd v Schoch & Ors [2007] QDC 143 per Judge McGill SC at [14]-[15].
- [45]The plaintiff is entitled to succeed and paragraphs 26-34 are struck out. The defendant should have leave to re-plead.
Is acting in "good faith" relevant?
- [46]The defendant pleaded in paragraph 20 of the Defence that it "… has not acted capriciously or dishonestly in its dealings with the company".
- [47]That plea is not made in a response to any contrary allegation made by the plaintiff in the statement of claim. The defendant submitted that it was a pleading of a material fact and did not offend against any part of r. 171. In effect, the defendant submitted that it was a proper pleading in its defence.
- [48]The defendant referred to Cussens & Ors v Sultan & Ors [2009] NSWSC 1114 in support of its submission. In that case the liquidators' claim was made under s 588FF(1); and the issue was whether the transactions were entered into in good faith: s 588FG(2). The defendants denied that the transactions were uncommercial or alternatively that they each became a party to the transaction in good faith and had no reason to suspect the company was or would become insolvent. Nicholas J wrote:
"33. Section 588FG(2)(a) requires proof that a person became a party to the transaction in good faith. There is no presumption in the defendant's favour. The defendant must establish a positive. The plaintiff is not required to prove the absence of good faith. The term 'good faith' is to be given its natural meaning, namely to act with propriety and honesty. This component of the defence imposes a subjective test …the concept of good faith is a concept separate from the requirements of s 588FG(2)(b) …"
- [49]The pleading of good faith is a proper pleading in the defence in the circumstances of this case. The plaintiff is not required to plead the absence of good faith. The plaintiff, inter alia, alleges an uncommercial transaction (paragraph 11 Statement of Claim). Paragraph 20 of the defence is open to be pleaded as a defence to s 588FG(2) of the Act. The fact that "good faith" is specifically pleaded in paragraph 19 of the defence does not preclude the defendant from pleading in paragraph 20: it simply expresses the same allegation and words that reflect the natural meaning of "good faith". Whether intended or not, paragraphs 19 and 20 of the defence should be read together.
- [50]The plaintiff's application to strike out paragraph 20 of the defence is dismissed.
The Application for Further and Better Particulars
- [51]The defendant has in a cross-application sought further and better particulars of the statement of claim. A request by the defendant for further and better particulars was sent to the plaintiff on 17 February 2010. A rule 444 UCPR letter dated 8 March 2010 was sent to the plaintiff by the defendant and it elicited further and better particulars of the statement of claim which are dated 11 March 2010. On 12 March 2010 the defendant's solicitors sent a further letter purporting to be a rule 444 letter although it does not state that in its content and does not refer to the period of days within which a response was required. Rather, it simply stated that the plaintiff's position was to be indicated by a time in the afternoon of 15 March 2010. It is apparent from that letter that the defendant considered the further and better particulars to have been inadequate. On 15 March 2010 the plaintiff's solicitor wrote to the defendant's solicitor stating, inter alia, that the correspondence was non-compliant with the UCPR. At the hearing of the application the plaintiff objected to the application on the basis that the UCPR had not been complied with.
- [52]Mr Hockings for the defendant submitted that the first letter (that dated 8 March 2010) was on its face compliant with the UCPR and had continuing effect notwithstanding the sending of the second and non-compliant letter on 12 March 2010, so as to enable the application to proceed. As an alternative he argued that rule 5 of the UCPR - that it was in the interests of the parties that the matter be dealt with - should be applied by the court. I heard the argument on this application on the basis that I would determine the objection in the course of the judgment.
- [53]If the second letter is non-compliant, then it simply becomes an item of correspondence and I do not consider that it necessarily intersects the continuing effect of the rule 444 letter of 8 March 2010 and I take the view that the latter was still current and effective for the purpose of the application. Whilst I agree with the plaintiff that the letter of 12 March 2010 is not a rule 444 letter I do not agree that the mere sending and receipt of a non-compliant letter renders the compliant rule 444 letter sent four days earlier ineffective. Accordingly I do not accept the objection in so far as it predicates the application being struck out.
- [54]The application raises three matters which for convenience can be simply described as follows:
- Unfair preference; particulars of the allegation that the defendant has received more than it would if it were to prove in the winding up.
- Particulars of the allegation of uncommercial transactions.
- Particulars of the insolvency of the company.
- [55]In the alternative, the defendant has sought to strike out paragraphs 8, 9, 14, 15, 16 and 18 to 25 of the statement of claim, pursuant to rule 171.
- [56]On the hearing Mr Hockings refined the application to some extent in that he sought further and better particulars of paras 1(a), 3, 4(a) and 5 to 14 of the request for particulars dated 16 February 2010. In summary they refer to particulars of every unsecured debt of the company, particulars of the detriment to the company of entering into the transactions, the names and addresses of "other parties" referred to in paragraph 9(c) of the statement of claim, particulars of each debt the company was liable to pay in the relation back period, the assets and liabilities of the company, particulars of the operating loss of the company, particulars of trade creditors, finance providers and directors who receive loans from the company. Hence there were some minimal concessions made in so far as the request for further and better particulars was concerned.
- [57]Mr Hockings submitted that the matters sought by way of further and better particulars were necessary to "fill the picture of the plaintiff's cause of action": NRNQ (a limited partnership) v MEQ Nickel Pty Ltd (2001) 2 Qd R 592. In my view the particulars sought in that case were quite different in nature from the particulars sought here by the defendant. He also referred to Robinson v Laws & Anor [2001] QCA 122 and to rule 157 UCPR which obliges a party to include in that party's pleading "particulars necessary to … define the issues for, and prevent surprise at, the trial."
- [58]Mr Moon submitted that the defendant was seeking evidence not particulars and that the manner in which the plaintiff had pleaded was in terms and in language that was customary in such pleadings. He submitted that the defendant had not been prevented in fact from pleading in some detail in the defence to the allegations in the statement of claim.
- [59]In so far as the three issues were concerned, the plaintiff submitted that:
Unfair preference: The allegation was pleaded concisely in paragraph 8 of the statement of claim and that the balance sheet of the company as at 15 March 2010 provided a basis for the defendant to calculate the relevant issue (in the terms that I have already referred to); that all of the material facts and particulars necessary to properly plead the allegation made pursuant to s 588 FA(1)(b) which was the relevant subsection of that section of the Act upon which the plaintiff relied, had been provided; and that the defendant was seeking either irrelevant information or evidence, not particulars.
- [60]Mr Hockings submitted that the plaintiff was fundamentally in error in so far as the allegation of insolvency was concerned because the plaintiff had provided a copy of a balance sheet. I do not need to consider that submission any further because Mr Moon for the plaintiff submitted that the balance sheet had been provided for a specific purpose and not for the proof of insolvency and that, at least by implication, there was no live issue about the tests for insolvency and whether the plaintiff had applied the correct test or not.
- [61]The balance sheet was sent, the plaintiff submitted, to enable the defendant to work out that the defendant had received more by the payments the subject of the transactions than it would if it were to prove in a winding up because the balance sheet showed the assets and the unsecured creditors: that is, it had nothing to do with proof of insolvency at all.
Uncommercial transactions: The further and better particulars assert no benefit to the company, detriment to the company and no benefit to any other party than the defendant in the making of the defendant transactions; that all of the material facts and particulars necessary to properly plead the allegation made pursuant to s 588 FB of the Act have been provided; that the defendant is seeking either irrelevant information or evidence, not particulars; and that the statement of claim specifies the "benefits" and the "detriments" that are alleged.
There was some concession by Mr Hockings about the issue of detriment and benefit in the course of the hearing and it seems to me that there was an acknowledgement that those matters simply cannot be pleaded in any more specific way than appears in the statement of claim.
The defendant referred to John Irving as liquidator of Mawson KLM Holdings Pty Ltd (in liquidation) & Anor v Starmaker (Number 51) Pty Ltd [2005] SASC 309. However, the pleading in that case simply recited the words of the section. It was struck out. That outcome is unsurprising.
The plaintiff submitted that the position in this case was different from that in the John Irving case: the "benefits" or "detriment" were provided in paragraph 9 of the statement of claim, read with the further and better particulars in paragraphs 2 to 4.
Insolvency of the company: the material and specific facts were set out in the pleading; and that the defendant was seeking either irrelevant information or evidence, not particulars.
- [62]The defendant’s submission was on similar grounds to the issue of unfair preference, above.
- [63]In my view the matters that purport to be particulars that are referred to in the request for further and better particulars, are a request for evidence. I do not consider that they are particulars at all. The proceedings are at a very early stage and there undoubtedly will be disclosure of a considerable volume of documentary material. That material is what is relied upon by the plaintiff to make the assertions that it has made in the statement of claim and it is upon that documentation that the reasons for the assertions will be, I would have thought, abundantly clear. I do not consider that any of the requests are proper requests for particulars. The defendant has been able to plead in a substantive and an intelligible way in the defence. It was not prevented from doing so by any lack of particularisation. The application for further and better particulars is dismissed.
The Application to Change trial venue to Brisbane
- [64]The defendant has sought a transfer of the proceedings - the trial in effect - to Brisbane. It relies on the fact that the head office of the defendant is in Brisbane, it has branch offices in some Queensland localities but not in Townsville and that the transactions in this case involved the branches at Emerald, Rockhampton and Brisbane. However, I am satisfied that there is a commercial connection with Townsville. The respondent does carry on business in Townsville in the holistic and legal sense.
- [65]The defendant had raised the issue of ‘jurisdiction’ by way of objection in the Notice of Intention to Defend, pursuant to rule 44(4) UCPR: "the defendant says that this proceeding has not been started in the correct district." Such an objection is taken to be an application (r. 44)(3).
- [66]In my view the proceeding has been commenced in the correct district jurisdiction. There is no substance in the submission so far as it relies on rule 44 UCPR. I dismiss the application made on that basis.
- [67]However, Mr Hockings also relied on rule 45 UCPR which involves the balance of convenience argument. Rule 45 provides as follows:
- [68]"45. Change of venue by Court Order
(1) This rule applies if at any time a court (the first court) is satisfied a proceeding pending in the first court can be more conveniently or fairly heard or dealt with in another court.
(2) The first court may order that the proceeding be sent for trial to or be dealt with by the other court."
- [69]Whilst the submission on the balance of convenient argument arose perhaps incidentally, the plaintiff had anticipated that it would be raised and submissions were also made upon that basis.
- [70]Mr Hockings identified a number of witnesses who reside or work in Brisbane who will ultimately most likely be witnesses for the defendant on a trial; that the only "connection" with Townsville in the context of rule 45 is that the liquidator's office is in Townsville; and that the balance of convenience was for Brisbane to be the trial venue.
- [71]Mr Moon, whilst responding to the effect that the liquidator was a court appointee and had custody of the company's records in its office in Townsville, primarily submitted that the application for change of venue was premature; it was too early to identify relevant witnesses for trial; and that significant interlocutory steps were yet to be completed - including disclosure - the implication being that the final issues in extent of evidence at trial were still yet to be determined.
- [72]I am not persuaded that the defendant has established a balance of convenience basis for a change of venue for the trial on the material presently before me. However, I will determine this application simply on the basis that it is premature in time. Other matters relevant to a balance of convenience submission may yet arise that affect one or other or both parties. That issue can be revisited if necessary later in the proceedings. The application is dismissed.
Costs
- [73]The plaintiff substantially succeeded on its application. It should have its costs of that application on the standard basis. The defendant failed in its applications. The plaintiff should have its costs of those applications on the standard basis.
Orders
Plaintiffs Application:
The Defendants applications:
Costs:
- The application to strike out certain paragraphs of the defence is granted;
- Paragraphs 2(c), (d) and (e),3,4,10(b), (d),and (e), 26 to 34 inclusive of the defence are struck out;
- The defendant has leave to re-plead and to file and serve an amended defence within twenty-one days;
- The application to strike out paragraph 20 of the defence is dismissed.
- The application for further and better particulars of the statement of claim is dismissed;
- The application for change of venue for the trial is dismissed.
- The defendant to pay the plaintiffs costs of and incidental to each application on the standard basis as agreed or as assessed.